State Street: Pensions are getting the innovation treatment

bobsguide caught up with JR Lowry, EMEA Head of State Street Global Exchange, before Sibos to talk about what the bank are working on for the corporate and the consumer world, as well as what they will be discussing in Geneva. What is your role at State Street? I am head of Europe, the Middle …

by | September 16, 2016 | bobsguide

bobsguide caught up with JR Lowry, EMEA Head of State Street Global Exchange, before Sibos to talk about what the bank are working on for the corporate and the consumer world, as well as what they will be discussing in Geneva.

What is your role at State Street?

I am head of Europe, the Middle East, and Africa (EMEA) for State Street Global Exchange (SSGX), which is a global provider of data and analytics solutions for institutional investors. In this capacity, I’m responsible for all of SSGX’s activities in EMEA. I also am helping to drive our strategy, business development, and acquisitions and partnership activity.  Within SSGX, we are heavily focused on providing technology-centric tools and services to our client base, including data management, analytics, software, indices and indicators, and advisory support.

What is the bank’s role in fintech?

Within State Street as a whole, we’re quite focussed on being at the front of financial technology. For example, we have a five-year corporate digitisation program called Beacon, which provides an overall framework for how we think about transforming and digitising our organisation. We also launched our Emerging Technology Centre (ETC) last year, which looks at how emerging technologies can impact the financial industry and how we can bring these changes into State Street.

How would you break this down?

Its two primary objectives are to: 1) identify, explore and prototype emerging and disruptive technologies that could have a major impact on State Street’s businesses in the long term; and 2) affect positive change on the culture of innovation at State Street through education and collaboration. One of the ETC’s key focus areas has been blockchain, where we have a number of exploratory efforts underway: internally as part of core software development; selectively partnering with vendors and other partners in this space to conduct private trials; and as part of a handful of consortia of the world's biggest banks and technology companies

What about innovation?

We are also embracing innovative fintech startups through acquisitions, investments, partnerships, and involvement in industry accelerators like London’s Level 39. We view the fintech startups as a font of fresh insights and talent, as well as a credible source of innovations to help bring new and enhanced services to our clients.

What is happening with European Pensions at the moment?

Consolidation is the single biggest trend amongst pension schemes at the moment. We recently conducted a survey amongst 400 pension schemes globally and found 80% plan to consolidate multiple retirement plans by pooling their assets and liabilities – with reduced cost and improved operational effectiveness often cited as the main rationale. However, pooling resources should not only be viewed as a cost-saving measure, but also as an important means of developing new capabilities and opening up fresh opportunities.

What about those who have not consolidated?

For those schemes yet to consolidate, this is in part because the more investment capabilities they take in-house, the more risk they inherently bring internally. As pension funds come under pressure to deliver better returns to members at lower cost, it seems clear that pooling assets and knowledge to cut costs and reduce the risks of seizing new investment opportunities will be a serious consideration for more funds. Finding the right partner to complement the attributes of a particular pension fund will be the key to ensuring this strategy pays off.

What can we expect for the future of this industry?

Whilst insourcing is appealing to many funds, it is far from a panacea — consultants and as external asset managers will continue to play a vital role in key areas. That said, it seems that pensions are looking for fewer, but more valuable relationships with external consultants. This will intensify competition among consultants and asset managers alike, but it will also open up new opportunities for the most forward-looking firms.

What should we expect from State Street at Sibos?

Kim Newell-Chebator, Head of Global Markets at State Street will be speaking at Sibos about corporate culture and behaviour – a key focus for us at State Street. In short, our observation is that different viewpoints and perspectives inherently fuel innovative thinking and debate that can lead to better business outcomes and drive the culture of constructive challenge and accountability necessary for risk excellence. Inclusive teams consistently outperform others when they include colleagues with varied: 1) lines of business – different areas of expertise addressing the same challenges, 2) years of experience – senior level and junior level employees challenging the status quo and 3) genders and ethnicities – bringing different perspectives together.

To be successful and innovative, companies need to be open and transparent – supporting constructive debate through diverse perceptions and views. To do this effectively, you need an employee base with a variety of different backgrounds, views and experiences as well as a culture of openness, desire to learn and willingness to challenge.

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